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Records: Ex-worker suspected of embezzling $883,000 from county

A former Maricopa County employee is under suspicion of embezzling $883,000 over three years from a bank account that processed the garnished wages of school district employees, county sheriff's investigators say.

Records: Ex-worker suspected of embezzling $883,000 from county

Sheriff's investigators believe that Jose Ricardo Baca, 33, of Phoenix, embezzled the money by listing his mother and roommate as employees and then issuing checks in their names.(Photo: Emmanuel Lozano/The Republic)

A former Maricopa County employee is under suspicion of embezzling $883,000 over three years from a bank account that processed the garnished wages of school district employees, county sheriff's investigators say.

Sheriff's investigators believe that Jose Ricardo Baca, 33, of Phoenix, embezzled the money by listing his mother and roommate as employees and then issuing checks in their names.

According to court documents, deputies learned of the missing money on July 11 and served search warrants on Baca's desk at work and his house on July 14 and 16.

Reached at home, Baca referred questions to his attorney, Guy Brown, who would not comment for the record.

According to county officials, Baca earned $38,958 in his job as a "garnishment specialist."

"The investigation is complex and currently underway," sheriff's spokeswoman Lisa Allen said in an e-mail. "We are awaiting receipt of all of Baca's financial records. He has been interviewed by sheriff's detectives, but we are not free at this time to release any of the contents of those or any statements he has made so far. He has not been arrested."

County Attorney Bill Montgomery was not yet aware of the case, which is not unusual because it has not yet been submitted to his office for charges. A county spokesperson said that the Board of Supervisors and county manager are aware of the investigation but pointed out that Superintendent of Schools Don Covey is an elected official and that the supervisors have no control over his budget.

An administrative assistant in Covey's office explained that Covey and his staff were in meetings all day and were unavailable and that Baca no longer worked there.

But the search-warrant affidavits lay out their theory of what happened.

First, some explanation of Baca's position.

Payrolls for all school districts in the county are run through the Maricopa County Education Service Agency, which Covey heads. If a teacher or other school employee has wages garnished to pay child support or other liens, the transaction is handled by the agency.

Those employees cannot have their wages deposited directly into bank accounts. Instead, they are issued live checks, which the garnishment specialist gathers and deposits into a designated garnishment account.

Then, a $5 fee is deducted and two new checks are cut: one for the employee and one for the garnished payment. Those checks are then automatically signed and mailed out.

According to the search-warrant affidavits, an employee in the county Treasurer's Office noticed a shortfall of about $300,000 in the garnishment fund.

That employee alerted employees at the Education Service Agency, who had noticed negative balances on prior occasions. Such shortfalls could be attributed to the lapse of time in which funds are deposited and checks drawn. In other words, an employee could claim that the deposits had not yet cleared when the checks were written.

The garnishment recipients were receiving their money, but the fees that had been deducted over the years — funds that the agency used to supplement the budget — were drawn down.

The Education Service Agency employees then searched records to see where the money was going and turned up the names of two unknown individuals who were the third- and fourth-largest agency payees — after the U.S. Department of Education and the Internal Revenue Service.

They linked the names to Baca. Since July 2011, checks totaling $491,805 had been written in the name of Baca's mother and $391,215 had been written in the name of Baca's housemate.

After the search warrants were served, investigators found check stubs with those names on them in Baca's possession, according to the search-warrant returns.

Neither the mother nor the housemate could be reached for comment. There was nothing in the record that implied they were complicit in the scheme, and no charges have been filed against them or against Baca.